Dive Brief:

• In its first earnings report as a publicly traded company, Allbirds on Tuesday said third quarter net revenue increased 33% year over year to $62.7 million. Compared to 2019, net revenue increased 40%.
• Losses for the DTC sneaker brand widened in Q3: Operating loss grew 64.3% year over year to $11.9 million, while net loss nearly doubled to $13.8 million, according to a company press release.
• Allbirds opened four locations during the quarter, pushing its total to 35 stores.

Dive Insight:

Coming off its IPO last month, Allbirds beat expectations in its first earnings report as a publicly traded company.

"Revenue was strong across channels and geographies, growing 33% year over year, with notable strength in U.S. physical retail," co-founder and co-CEO Joey Zwillinger said in a statement, adding that the brand saw "strong consumer response" to its new offerings, including its performance apparel line.

But even as Allbirds exceeded revenue expectations, the brand's losses continued to grow in the third quarter, something that has affected many DTC brands. To help offset the costs of acquiring customers online — which has oftentimes come at the expense of profitability — many digitally native brands have turned to physical retail.

Allbirds seems to be leaning further into its offline presence, which began in 2017 when it opened its first store. The brand continued its store expansion into the fourth quarter, opening stores in Denver, Chicago, the Boston area and Paramus, New Jersey.

Zwillinger on a call with analysts Tuesday said repeat customers shopping across its channels — online and in store — "are the most valuable to us" because "these customers spend 1.5x when compared to digital-only repeat customers, giving us more reason to continue our store expansion."

The brand provided guidance for the full year, projecting net revenue to grow up to 24% year over year (up to 40% compared to 2019) to between $270 million and $272 million. Adjusted EBITDA is expected to be between negative $15 million and negative $17 million, including public company costs of $5 million.

But analysts believe Allbirds is in the early stages of multi-year growth. Telsey Advisory Group CEO and Chief Research Officer Dana Telsey projects a sales compound annual growth rate of 26% to $700 million in 2025, up from $218 million in 2020, according to an emailed note. Telsey also anticipates EBITDA to turn positive in 2023 and reach $45 million in 2025, driven by Allbirds continuing its retail expansion, scaling international markets and adding to its product offerings.